Virtual Library File - Multilateralising 21st Century Regionalism

Regional trade agreements have increased dramatically over the last twenty years. Since 1995, the founding year of the World Trade Organization (WTO), more than 400 regional trade agreements have be ...

Regional trade agreements have increased dramatically over the last twenty years. Since 1995, the founding year of the World Trade Organization (WTO), more than 400 regional trade agreements have been registered under the General Agreement on Tariffs and Trade (GATT). In the previous 45 years, only 124 regional trade agreements were registered. Moreover, recent initiatives like the Trans-Pacific Partnership (TPP) or the Transatlantic Trade and Investment Partnership (TTIP) aim to go far beyond the size and depth of traditional trade agreements. By taking on contested issues such as government procurement and private litigation, they form a new generation of trade agreements. As a result, a patchwork of regional free trade zones has emerged, which calls into question the multilateral trade regime under the auspice of the WTO and its languishing Doha Development Round (DDR) This trend has important distributional and political ramifications. Due to their comprehensiveness, the planned regional free trade agreements potentially offer immense benefits for the participating economies. However, the resulting trade diversion effects are detrimental to non-participating countries. As rich economies are more likely to profit from trade than developing ones, the divide between the two will probably grow. Consequently, there may be a potential shift in the balance of power in the global economy that could systematically discriminate against mostly southern, developing nations.

The multilateralisation of regionalism takes different forms when applied to deep versus shallow regional trade agreements (RTAs). Shallow agreements focus on discriminatory tariffs; henc e, multilateralisation strives mainly to reduce discrimination. Deep agreements focus on the disciplines necessary to foster international production sharing; key provisions often resembling unilateral liberalisations that just happen to be bound by an RTA . In this case, multilateralisation achieves network externalities and solves co - ordination problems. This paper suggests a novel framework for thinking about the costs and benefits of multilateralising the provisions in deep RTAs, including those that see m set to appear in the Trans - Pacific Partnership (TPP) and the Trans - Atlantic Trade and Investment Partnership (TTIP).